When you’re first starting out in your freelance career, you’ll choose a rate that feels right for you. But as you learn and grow, make new connections, and increase the value you’re providing to your clients you’ll want to raise your freelance rates.
In general, freelancing is a merit-based career. Your work history, age, race, gender, demographic, background… none of those things matter. Your clients will hire you (and continue to work with you) as long as you are good at what you do.
Your compensation should also be merit-based. And that’s why you should think about increasing your rates as you get better at what you do.
Unfortunately, as with all pricing questions, there’s no black and white answer. Here are a couple of reasons you might raise your freelance rates for individual projects:
- Demand for your services is high.
- Your client wants a particularly fast turnaround.
- The company is large and has an equally large budget.
But today, let’s talk about increasing your rates on the whole.
I’ll use the term “hourly rate” here. But we don’t really recommend freelancing by-the-hour. Instead, estimate how long a project will likely take you, and use your hourly rate to provide a project price to your client.
Signs It’s Time to Raise Your Freelance Rates
The first major sign is that clients are repeatedly blown away by how little your charge. Now, one or two clients expressing surprise at a low price point is one thing. On the other hand, if the majority of your clients are amazed, then it’s definitely time to raise your freelance rates.
Other signs can be more subtle. So it’s a good idea to take some time each year to evaluate your business and whether it might be time to charge more. Here are some questions you can ask yourself as part of this process:
Have I learned anything new in the last year?
New skills equal more value for your clients. So make sure you are compensated accordingly. Make a list of everything you’ve done for clients in the past year, any results you have from that work, and any additional skills and knowledge you’ve acquired (whether from courses or simply from working with a client so much you know their business inside and out!).
What do I deliver to my clients that is above and beyond my current rates?
As things get easier and faster for most freelancers, we get better at delivering a five-star service experience. If you’re doing so, clients will be happy to pay more for that experience.
That may mean you’re playing the role of project manager in some instances, ensuring no one is ever left guessing where your piece of the project stands. Or, you’re delivering suggestions outside of your project that will help the client grow their business. Add these to your list!
Am I delivering my work with a side of strategic thinking? Or am I able to offer extra convenience for my clients?
Strategy and convenience translate to added value for the people and companies you’re working with. You should be charging higher fees if you’re able to help them more strategically or help them save time. (We all know time is money!)
Asking questions like these every year will help you evaluate your growth as a freelancer and as a service provider.
Announcing Your Rate Increase
In general, you won’t need to announce your new price-per-hour when you raise your freelance rates. (Remember, your hourly rate is a number used internally, within your own business, as a guide to pricing out projects.)
For example, when you quoted a past project with $50 per hour in mind, they saw the quote as a $700 project price. Now, you’re working on a different project with a new rate of $55 or $60 per hour. But since you price each project individually, they won’t really notice a rate increase. You’ll simply give them a new price for the new project.
The exceptions are retainer clients or other clients you work with on a regular basis. Since they’ll have gotten used to paying a certain project fee, it’s important to give them fair warning that the price will be going up.
No Justification Necessary
If or when you choose to announce your self-appointed raise, remember: you are under no obligation to explain yourself. As a freelancer, you have the right to charge whatever you wish. Once you’ve convinced yourself that you’ve earned the raise, stand by it. You don’t need to justify it to your clients.
The only time you really can’t raise your rates is when you’re in the middle of a contract. If the contract states an hourly or project rate, you’re stuck with that until the end of the contract. Before signing the next contract, make sure you take your new rate into consideration.
However, if you’re working regularly with a client and you don’t have a contract, you can send a quick email to let them know your rates have changed. Here’s a sample:
Quick update about rates
Hi [CLIENT NAME],
I just wanted to let you know that my rate will be changing as of [DATE]. My new rate will be $XX/hour. Please let me know if you have any questions.
It’s been a pleasure working with you, and I’m looking forward to our future projects.
Easy enough, right?
Once your client emails you back acknowledging your new rate, you’re good to go. (Note: the response is important; you can’t just email them without verifying they agree.)
A Few More Considerations as You Raise Your Freelance Rates
You don’t really want to increase your rates by leaps and bounds. For example, raising rates from $50 to $100 per hour is quite the jump! Think along the lines of $5 to $10 per hour. And if that doesn’t sound like much, remember that $10 over the course of a year (working full-time) is more than $20,000.
Another thing is that you don’t NEED to raise your rates annually. We simply recommend checking in with yourself each year to make sure you feel comfortable with your rates in relation to the value you’re providing.
Lastly, there is a limit on how high you can raise your rates. Depending on your clients and the serve you are offering, they may balk at a project price that has a baseline of $300/hour. The caliber of your work needs to match the project cost, regardless of your rate.
Pricing is never going to be an exact science. But if you are intentional about learning and improving, you can raise your freelance rates accordingly (or at least think about it).
Your turn! Does this system make sense? When will you plan to evaluate your rates? Let us know in the comments below!